Towards 2022: What Buyers And Sellers Need To Know

July 15th, 2021 - by Brad Gillespie

2021 has been a strong year for the Sydney property market.

In the first five months of the year, the median dwelling price lifted 12.5%, according to CoreLogic data. The median house price (as opposed to apartments) rose even more, up 15.1% since the end of 2021.

Here in the Inner West and inner-city Sydney, we’ve seen some incredible results too. The median Alexandria house price has lifted almost 17% since June 2020, according to realestate.com.au.

But can we expect the current rate of growth to continue? And what are the main trends likely to influence the property market, as we look forward to 2022?

Price growth set to continue

Sydney’s property market has gone through several booms over the past decade but there has rarely been a market as strong as this one. To put the current market into perspective, 12.5% growth means that a property that was worth $1 million on 1 January was worth $1,125,000 by 31 May. That’s an average of $833 every day.

Many commentators also believe that we’ll see further growth over the remainder of this year and on into the next.

In February, CBA thought Sydney property prices would rise 16% over 2021 and 2022. In March, ANZ Bank forecast Sydney property prices would rise a total of 19% this year and another 6% in 2022. In May, Westpac forecast growth of 16% this year and 5% next year. In other words, there is consensus that this boom will continue for some time yet.

This is consistent with what we’re seeing on the ground. Open homes are busy, auction clearance rates are high (on the weekend of 19 June 2021, CoreLogic recorded an auction clearance rate in the Inner West of 94.4%) and buyer depth is strong.

Of course, nothing in life or property is certain and there is always the risk that a prolonged lockdown or other economic shock could change the market dynamics. However, there is much more likelihood that the market will continue to rise than it won’t.

What to expect in 2021 and 2022

Our area is in strong demand. According to realestate.com.au, each listing in Alexandria gets three times as much interest as the NSW average, while each listing in Erskineville gets more than four times as much traffic as the average.

The Inner West and Inner City are particularly popular with groups such as young professionals, first home buyers and investors and we expect that this will help it outperform many other areas. After all, first home buyers and investors are both coming back into the market in big numbers. ABS data shows that loans to first-time buyers increased 59.6% between April 2020 and April 2021, while loans to investors increased 63.0% over the same period.

New projects, new infrastructure, new entertainment and recreation venues (including the Gunyama Park Aquatic and Recreation Centre) and new late-night retail, dining and drinking options are all making this an even more desirable location for people who want to live an interesting, full and varied life.

We’re also seeing limited stock levels which are influencing the supply side of the supply and demand equation, meaning that as this becomes more popular there are fewer properties to meet the demand and this is creating a genuine fear of missing out (FOMO) among many buyers.

What this means if you’re buying in Sydney’s inner west and inner city

When a quality property does hit the market it can be hotly contested.

This can be intimidating for buyers, especially if you’re getting into the local real estate market for the first time. After all, while government assistance such as the First Home Loan Deposit Scheme and stamp duty concessions can help you secure a home, there is still the fact that you’ll need to continue paying a mortgage once you’ve bought.

On this front, the good news is that interest rates are unlikely to rise too quickly or too soon. The RBA has already flagged that it is comfortable leaving rates where they are until wages begin to rise. It is more likely that restrictions will be imposed on lending than interest rates will be pushed too much higher.

If you’re buying, it pays to do your groundwork before searching, so that the moment you see something you’re interested in, you’re prepared to act. You should also view as many properties as you can so that you recognise the value and also get an understanding of what you want.

Some sellers will accept a pre-auction offer, which means you may be able to get property taken off the market before others get the chance to buy. However, we’re advising most sellers to wait until the auction and let competition between potential buyers play out.

The other thing to remember is that, in the long term, property prices almost always rise. So, even if you feel like the market is getting away from you, time is likely to prove that you didn’t overpay.

What does it mean if you’re selling?

If you’re selling in a market like this, it can be tempting to think property sells itself. To some extent that’s true - there are more buyers than sellers right now. But that doesn’t mean it will sell for the best price. In many ways, using a decent real estate agent in conditions like these is even more important because they’ll have a more comprehensive and nuanced understanding of both the market and buyers and are less likely to leave money on the table.

Want more?

Contact our team today to find out more about how we can help you buy and sell in Sydney’s inner city and inner west.